Australia’s traditional retailers remain the strongest retail brands, according to a new ranking by agency Interbrand, showing that so far they have successfully fended off the challenge, in that sphere at least, from online challengers.

The local ranking, which also includes Big W ($US562 million), Target ($US536 million), Kmart ($US516 million), David Jones ($US512 million) and JB Hi-Fi ($334 million), bucks a trend that sees at least two online retailers in the larger ranking of the US’s biggest retail brands.

In the much larger US market, one book retailer, Amazon, features as the fourth-largest retail brand (worth $US18.6 billion) behind Walmart ($US141 billion), (US) Target ($US25.1 billion) and Home Depot ($US22.9 billion). Online auction company eBay came ninth with a brand value of $US10.9 billion.

The valuation of brand – the inherent essence or promise that a product holds for consumers – reflects not only aspects that a customer sees, such as service levels and queues, but also the back-end work a retailer does to safeguard its competitiveness and ensure future profitability, says Interbrand’s Sydney-based general manager, Andy Wright.

This is reflected in the clearly seen growth in the four Wesfarmers brands’ values. In 2009, the last time the global consultancy did a detailed study of the Australian market, it produced a ranking of the top 20 local brands that included a range of industries. That list, headed by Telstra, CBA, NAB and Westpac, included Woolworths, Harvey Norman, David Jones, Myer and JB Hi-Fi, but none of the brands – which Wesfarmers acquired in November 2007.

“We’ve read a lot about the supply chain and consolidation of logistics happening at Wesfarmers," Wright said. “That is one of the things we believe is the common thread that will probably give them the edge in the future. The value is based on past performance, but also future profitability."

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Wesfarmers is also strengthening some of its brands as it defines them better.

“We have seen improvements in terms of Coles, Kmart and Target," Wright said. “It is the beginning of the Kmart and Target brands being pulled apart in the eyes of customers."

While the entry of foreign online retailers into the Australian market brings a challenge that will force the locals to lift their game, the extensive channels the established retailers already have in distribution and supply are crucial to protecting their turf – and should be exploited further – he says.

While Amazon, like Walmart, has already been trialling same-day deliveries in the US and could try to bring that disruptive practice to Australia, the Wesfarmers businesses, for example, could use their extensive back-end strengths to reinforce their offering and brand.

“If you look at the potential Wesfarmers has, with a number of stores under the same umbrella, the ability to buy online from Kmart and have it delivered to a Coles around the corner from you is something that could be quite interesting in the future," Wright says. “They are already talking about click and collect, but can it become more sophisticated than that?"

A Wesfarmers spokesman said the idea hasn’t been looked at as the businesses and their costs were all separate.